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Friday, July 31, 2009

Morning Market Report

There's breaking news. The Gross Domestic Product number came out and the economy contracted by one percent over the second quarter. (April through June) The consensus number was that the economy would contract by 1.5%. This is the most promising economic news in months. This is the fourth straight quarter of contraction which used to be a technical definition of a depression. (though most people don't consider that the definition anymore) Also, with a h/t to a reader, the first quarter GDP was revised to a drop of 6.4% from 5.5% originally. Of course, expect this number to be adjusted as well.

So, it's perplexing that the major indices have lost value since the announcement an the Treasury bonds have gotten better. The Dow, S&P, and NASDAQ were all up about a half a percent and now they are down slightly. Meanwhile, the Ten year Treasury Bond is now at 3.58% whereas it was trading at 3.64% before the announcement.

According to CNBC, this may be a clear case of buy on rumor and sell on news. While the numbers were better than expected, it appears that traders were already expecting them. The market has gained more than ten percent in about two weeks, and so it's possible that a better number was necessary to keep the momentum going. Either way, expect some volatility today.

Meanwhile, oil is trading down at $66.25 after testing $67 per barrel before the number came out. The Dollar is down against most other currencies though somewhat marginally. Against the Euro, the Dollar is down .31%, it's down .01% against the British Pound, down .17% against the Japanese Yen, and it's down .04% against the Canadian Dollar.

Stock indices were up across the board in the Far East and the exact opposite in Europe. The Hang Seng in China was up 1.68%, the Japanese NIKKEI was up 1.89%, and the Straits Time Index in Singapore was up .89%. In Europe, the British FTSE was down .27%, the DAX in German was down .64%, and the Spanish index was down .41%.

In individual stock news, Chevron is the biggest story. Its earnings fell 71% and they were weaker than estimates. Estimates had their earnings at 91 cents a share and they came in at 86 cents per share. Earnings were "only" 1.75 billion Dollars in the quarter. General Electric is also up after a Goldman Sachs upgrade.

Disclosure:

All information here is meant for informational purposes and not meant as an endorsement of an investment and shouldn't be taken as such. I am NOT a licensed investment professional and all investment strategies should be made on a personal level.